I am not sure I'd call it proprietary really, because if an NVIDIA card is not installed, the effects will be relegated to the CPU instead. A proprietary feature would mean that it couldn't be used at all without the proper hardware.

"If it was GPU accelerated (as in they allowed Radeons to truly utilize PhysX) AMD chips WOULD run it much better, that's why they won't do it."

What leads you to assume this?

I find it a little odd that so many people are at NVIDIA's throat over PhysX. It could have just as easily been AMD that purchased AGEIA and wound up in the same situation. But apparently AMD didn't have the foresight to see value in it, and instead decided to sit back and wait for another open solution to come along. It didn't even try to create a competing solution. If you want an even better example of AMD resting on its laurels, look at GPGPU. NVIDIA was the company that even made that a thing to the mass market. It took years after NVIDIA released CUDA for AMD to follow-up with something tangible.

This all aside, unless the game prevents you from even activating PhysX if no NVIDIA card is installed (unlikely, but it's up to the developer, or the level of NVIDIA pressure on the developer), nothing stops AMD users from enabling it and seeing where it gets them. Borderlands 2 runs just fine with PhysX High for a lot of AMD users. Your luck will improve if you have a good CPU.